NOTE 7 - INCOME TAX

A.	Corporate tax rate

Ordinary taxable income in Israel is subject to a corporate tax rate of 23%.

The Company’s subsidiary Entera Bio, Inc. is taxed separately under the U.S. tax laws at a tax rate of 29% (Federal and state tax)

B.	Losses for tax purposes carried forward to future years

	The balance of carryforward losses as of December 31, 2022 and 2021 are approximately $67.1 million and $56.1 million, respectively.

	Under Israeli tax law, tax loss carry forward have no expiration date.

C.	Tax assessments

	The Company and its subsidiary have tax assessments that are considered to be final through tax year 2017.

D.	Loss (income) before income taxes is composed of the following

	Year ended December 31
	2022			2021
Entera Bio Ltd.		12,997			12,362
Entera Bio Inc.		(65	)		(116	)
Total loss before taxes		12,934			12,246

E.	Income tax expense (benefit):

	Year ended December 31
	2022			2021
Current:
Subsidiary:		(37	)		158
Total current income tax		(37	)		158
Deferred income taxes		174			(217	)
Total deferred income taxes		174			(217	)
Total income tax expense (benefit)		137			(59	)

F.	Deferred income taxes

	December 31,
	2022			2021
Deferred tax assets:
Net operating loss carry forward		15,428			12,895
Research and development		1,225			1,319
Share-based compensation		877			876
Other		158			152
Net deferred tax assets before valuation allowance		17,688			15,242
Valuation allowance		(17,645	)		(15,025	)
Net deferred tax assets		43			217

The Company has classified the net deferred tax assets as long-term. In assessing the likelihood of realizing deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences and carry forward losses become deductible. Based on the taxable loss in the Israel, management believes it was more likely than not that the deferred tax assets will not be realized in the Israel and believes it was more likely than not that deferred tax assets will be realized for the U.S. subsidiary.

G.	Rollforward of valuation allowance:

Balance at January 1, 2021		12,420
Additions		2,605
Balance at January 1, 2022		15,025
Additions		2,620
Balance at December 31, 2022		17,645

H.	Reconciliation of theoretical tax expenses to actual expenses

The primary difference between the statutory tax rate of the Company and the effective rate results virtually from the changes in valuation allowance in respect of carry forward tax losses and research and development expenses due to the uncertainty of the realization of such tax benefits.

I.	Uncertain tax positions

As of December 31, 2022 and 2021, the Company does not have a provision for uncertain tax positions.